Latest News Legal

What is new under National Company Law Tribunal, NCLT Amendment 2020

The NCLT Amendment 2020 has been created to amend the existing NCLT Rules, 2016. This was notified by the Ministry of Corporate Affairs on the 3rd of February 2020 and will be effective from 6th of February 2020. These amended rules furnish about the new facility for application for takeover offer of companies.

What is NCLT?

National Company Law Tribunal (NCLT) is a quasi-judicial body set to rule over the registered companies in India. It has been formed after dissolving the Company Law Board. NCLT plays a major role in regulating companies. It is vested with so many powers on it. Some of the powers are such that, it can de-register a company, it can freeze the assets and securities of the company.

Amended Rules of 2020

In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 469 read with section 230 of the Companies Act, 2013, the Central Government hereby makes the following rules further to amend the National Company Law Tribunal Rules, 2016. These rules may be called the National Company Law Tribunal (Amendment) Rules, 2020.

• After Rule 80, the following rule shall be inserted, as Rule 80A is below:

80A- Application under section 230– An application under sub­section (12) of section 230 may be made in Form NCLT-1 and shall be accompanied with such documents as are mentioned in Annexure B.

• After Rule 22 and the entries relating thereto, the following shall be inserted as below:

22A- Sec 230(12) – Application in cases of takeover offer of companies which are not listed. Fees required Rs. 5,000.

• The list of documents to be attached with the above application shall be as follows:
• Affidavit verifying the petition
• Memorandum of appearance with copy of the Board’s Resolution or the executed vakalatnama, as the case may be.
• Documents in support of the grievance against the takeover
• Any other relevant document

Applicability of NCLT Amendment 2020       

The arrangement or compromise in a company includes reorganizing the capital share of a company. This takes place by consolidating the shares of different classes or by dividing the shares into different classes. The compromise or arrangements include the takeover offer of companies other than listed companies. The takeover offer shall be as per the regulation set by the Securities and Exchange Board. If any party finds it injustice about the takeover offer, they can appeal to the Tribunal. The applicant can file the application in Form NCLT-1 and the applicant can be either being a creditor or a member of a company.

Payment of Fees

The creditor or the member applying for the cases of the takeover offer of the companies must comply with paying an amount of Rs. 5000.

Required Details for Form NCLT-1

The required for filling and submitting the Form NCLT-1 are as follows:

• The particulars of the original application, rejoinder, reply or interlocutory application
• A declaration stating that the matters of the petition are within the jurisdiction of the Bench
• If applicable the limitation of the petition
• The facts of the issue in a chronological order
• The relief sought by the applicant for the petition
• The details of the bank draft. This is to verify payment of the fees by the applicant

Also, Read: Process of Filing of Appeal Before NCLT.

Purposes of Form NCLT-1

The Form NCLT-1 is applicable to apply for several other purposes. The Form NCLT-1 is applicable for any petition or reference. The following are the purposes:

• For the changes in the financial year
• To the Tribunal if the incorporation of the company has taken place by furnishing false or incorrect information or by any fraudulent action
• For converting a public company into a private company
• For issuing further redeemable preference shares
• An appeal against the refusal of registration of shares
• An appeal to rectify the register of a member
• To the Tribunal for consolidating and dividing the share capital
• Deposition for the repayment of deposits or the interest
• To call for the Annual General Meeting (AGM)
• To call for any other general meetings
• For a voluntary revision of the financial statement on the Board’s report
• For petition against the removal of the auditor
• Apply for a petition against the removal of directors
• For Investigating the company’s affairs
• For relief from the oppression cases
• Apply to opt-out of the proceedings at any time

Documents Required

The following are the documents required to be enclosed along with the Form NCLT-1

• An affidavit which verifies the petition
• A memorandum of appearance. This should be accompanied with a copy of the executed vakalatnama or the Board’s Resolution.
• The documents which support the grievances against the takeover.

Conclusion

The main changes are made with the new Rule 80A according to which an application in Form NCLT-1 shall be filed before the tribunal by an aggrieved party in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on the application, pass such order as it may deem fit.

Read, More: Appeal on National Company Law Tribunal Process & Requirement .